4 Singapore REITs to Include in Your December Watch List

REITs are one of the best asset classes an income investor can park their money in.

The requirement for them to pay out at least 90% of their earnings as distributions makes them perfect as sources of passive income.

This year, the REIT sector has been under stress because of the twin headwinds of high inflation and surging interest rates.

As a result, investors are worried about whether REITs can increase or even maintain their distributions.

We highlight four REITs with interesting catalysts that you can decide to include in your buy watchlist.

This crop of REITs should provide peace of mind as well as steady distributions going forward.

Mapletree Logistics Trust (SGX: M44U)

Mapletree Logistics Trust, or MLT, has a portfolio of 189 properties spread out over eight countries with assets under management (AUM) of S$13.3 billion as of 30 September 2023.

For the first half of fiscal 2024 (1H FY2024), the industrial REIT saw revenue dip by 0.7% year on year to S$368.9 million.

Net property income (NPI) slid 1% year on year to S$320.1 million but distribution per unit (DPU) inched up 0.5% year on year to S$0.04539.

MLT announced divestments that were completed or are pending completion in the second quarter of FY2024 (2Q FY2024).

These comprised five properties in Singapore, Malaysia, and Japan that were all sold above valuation.

For 1H FY2024, the manager also capped off an acquisition of eight properties in Japan, South Korea and Australia worth S$904.4 million.

Earlier this month, MLT also announced the divestment of 10 Tuas Avenue 13 at a 15.7% premium to its latest valuation.

At the same time, the REIT also sold off two Malaysian properties for RM 151.2 million, both at premiums to their respective valuations.

This active capital recycling will enable the REIT to rejuvenate its portfolio and help sustain its DPU over time.

CapitaLand Integrated Commercial Trust (SGX: C38U)

CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with 21 properties in Singapore, two properties in Germany, and three properties in Australia worth S$24.2 billion.

For the first nine months of 2023 (9M 2023), CICT reported an encouraging business update.

Gross revenue rose 9.8% year on year to S$1.2 billion while NPI increased by 6.8% year on year to S$827.3 million.

The portfolio also boasted strong operating metrics with committed occupancy staying high at 97.3%.

Rental reversion for 9M 2023 came in positive for both the retail and commercial segments at 7.8% and 8.8%, respectively.

CICT’s retail portfolio also saw a 4% year-on-year rise in tenant sales with a nearly 13% year on year increase in footfall.

The manager has an ongoing asset enhancement initiative (AEI) at CQ @ Clarke Quay that should be completed by the end of this year.

This property has already achieved 85% occupancy including leases under advanced negotiations.

Daiwa House Logistics Trust (SGX: DHLU)

Daiwa House Logistics Trust, or DHLT, is an industrial REIT with 16 modern logistics properties across Japan with an appraised value of JPY 87.5 billion as of 31 December 2022.

For 9M 2023, the REIT saw gross rental income rise 4.9% year on year to JPY 4.1 billion.

NPI improved by 3.9% year on year to JPY 3.5 billion.

Distributable income edged up 2.2% year on year to S$27 million.

DHLT enjoyed full occupancy as of 30 September 2023 with a long weighted average lease expiry by gross rental income of 6.3 years.

The REIT’s aggregate leverage stood at 36.2%, leaving room for more yield-accretive acquisitions.

Its cost of debt is also very low at just 0.99% with 100% of its borrowings hedged to fixed rates.

CapitaLand Ascott Trust (SGX: HMN)

CapitaLand Ascott Trust, or CLAS, is the largest hospitality trust in Asia Pacific with a portfolio of 103 properties in 44 cities within 15 countries.

The trust’s AUM stood at S$8.1 billion as of 30 September 2023.

CLAS released a commendable business update for 3Q 2023.

For 9M 2023, gross profit jumped 23% year on year as revenue growth outpaced the increase in operating and finance costs.

The portfolio’s revenue per available unit (RevPAU) also grew 17% year on year to S$154 and was 2% above pre-pandemic levels.

Earlier this month, the manager of CLAS announced the divestment of two hotels in Australia for A$109 million.

These properties were sold at 5% above their book value and CLAS will recognise a net gain of around S$12.4 million.

The sale will be completed in the first and third quarters of 2024 for each of the properties.

This transaction is part of the REIT’s active portfolio reconstitution strategy to deliver sustainable returns to stapled security holders.

Is it a good time to buy into Singapore REITs? If you’ve thought about it, then our latest REITs guide will be an essential read. This exclusive pdf report shows you why REITs are still excellent assets, what sectors to look out for and how to find good REITs today. The info inside can help you build a solid retirement portfolio. Click here to download it for FREE.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.

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